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Types of Annuities and How It Can Be a Guide to Your Financial Solutions

February 27, 2012 | Comments: 0 | Views: 152

Whenever one is looking for investing money the main concern is to put hard earned bucks into a plan that will solve two purposes, ensure guaranteed future income inflow and safe investment in the present scenario. According to the investment plan and financial experts annuity essentially is an contract with the insurance company in which there is a pact created between you and the insurer to pay a specific amount of money with a specified frequency for the lump sum of money you pay in the beginning. If you have a huge sum of money that needs to be invested into a safe investment plan which will ensure regular income inflow without any hassles then on top of your list should be investing in an annuities investment plan. Many people out there use annuities as a part of their retirement strategy simply because they receive a steady income stream once they enter the dawning years of their life.

One more advantage of annuities is that for a large sum of money you are looking to invest in productive plan, annuities come to the rescue as they have no tax liabilities so you can enjoy the benefits now and in the future when the money starts to come-in. So what are the different types of annuity plans that one can opt for depending on your needs? Although annuities are classified in two broad categories but they can be further classified into categories depending on many determining attributes, let's have a look.

1. According to the commencing of annuity payment

a) Immediate annuities:

In this type of annuities plan the insurance company starts the payment for life immediately but it is only possible if you make a one-time contribution of money and the portion of money is a tax-free return on your principal amount. The payments in this kind of option can be received in monthly, quarterly, semiannual or annual bases.

b) Deferred annuities:

It is good option if you are planning on accumulating money for retirement for a very long period and the money grows sans any taxes so that you don't have to pay any taxes until the withdrawal of money. This annuities plan can be funded via a single premium or through a flexible payment option.

2. According to method opted for payment of premium

a) Single premium annuities: A very good annuities investment option if you have a large sum of money ready to be invested in a productive plan in return for guaranteed income. It is advisable for people who have inherited a large sum of money from ancestors, legal settlement or business profits etc.

b) Flexible premium annuities: This kind of plan gives you the flexibility to fund the money over a period of time in years with premium payment on a set schedule or randomly. The assets are accumulated on tax-deferred basics.

3. According to investment of assets

a) Fixed annuities: This guarantees a specific rate of interest for a specified time period and also offers preservation of assets with protection from market conditions.

b) Variable annuities: It provides you with opportunity for growth of assets via investment choices but also comes with greater risk as volatile market conditions may leave you in a soup.

1997, Advanced Capital Management (ACM) comprising of one of the best team of investment advisors in florida has served hundreds of people - including business owners, individuals, retired couples, families, and many more.

Source: EzineArticles
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